Petrolia asks court to rule on Gaspé drilling ban

MONTREAL – Pétrolia Inc. is taking legal action to quash a drilling ban in the town of Gaspé, the latest development in a highly-publicized battle between the junior exploration company and the municipal council.

Pétrolia, which is seeking to become the first commercial producer of oil in Quebec, said Wednesday it filed a motion for declaratory judgment with the Quebec Superior Court asking that a bylaw adopted by the town Dec. 19 be declared invalid. The company says the town failed to inform it of the bylaw until Jan. 9, three weeks later.

Pétrolia has exploration permits validated by the Quebec government for its Haldimand site, located just on the outskirts of Gaspé. It was set to begin drilling at the location in early January when it learned that the town council had voted in new rules banning oil drilling in its proximity. The town’s mayor, François Roussy, has said he wants to protect the drinking water supply.

The move took most people by surprise, including the provincial government. Pétrolia said it subsequently stopped preparatory work on the site in order to give officials from the town and the province a chance to resolve the matter. That effort has now failed.

“No sign of a solution has been found to satisfy the municipal authorities,” Pétrolia said in a statement, adding the town has rejected its suggestion to jointly submit the dispute voluntarily to the court under the code of civil procedure.

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“Given the nature of the case, it is imperative that the matter be brought before the court in a timely fashion,” Pétrolia said. “In order to protect its rights and those of its shareholders, Pétrolia felt compelled to call upon the court to resolve the dispute.”

The company said it would have no further comment on the matter.

The dispute has laid bare the apprehension Quebecers have towards oil and gas development as they wrestle with questions of safety and how much should really be due to local communities. It has also raised a legal question: Do the decisions of municipal councils outweigh the drilling rights conferred to companies under provincial laws?

Haldimand is a horizontal drilling play with an estimated 7.7 million barrels of recoverable oil over a surface area of about 9 square kilometres. The company had hired outside experts from Quebec’s INRS University to monitor the drilling for any impact on local groundwater.

Under the new rules, Gaspé prohibits anyone from introducing into the ground “any substance that could alter the quality of the underground or surface water” earmarked for human or animal consumption within 10 kilometres from a municipal surface water supply site. Pétrolia’s drilling pads are about 5 kilometres away from the city in forested areas. Like other oil firms, it uses some chemicals in its drilling process although it says none of them are toxic.

You can find Gaspé residents for and against Pétrolia’s Haldimand drilling plan. Some see it as the key to the region’s decades-long deliverance from economic hardship and have formed a group supporting resource development. Others are fearful of the impact on the environment, arguing local citizens are receiving too little in return.

Pétrolia shares were unchanged Wednesday on the Toronto Venture Exchange, trading at 83¢.